It should've been Shield at the very least. Not that there's really any rhyme or reason to what's going on in the Northern Crater environment wise (actually, it was pointed out on another site, that the hodgepodge environment was largely Jenova's fault since she/it possessed illusionary powers; the tl;dr of the theory is that Jenova has the ability to get into peoples' minds and twist them in ways that creates delusions; for instance, Sephiroth's belief that he was an Ancient or that Jenova was an Ancient, Cloud's belief that he became a hero just like Zack (almost to the point of thinking he was Zack), Cloud's initial rendition of the Nibelheim incident, Cloud's behavior at the end of the Temple of the Ancients (part of the reason why you see Kid Cloud at this point is that this is what Cloud really is (or his ID in psychology/Xenogears terminology), with Big Hero Cloud (Ego and/or Super Ego) being an almost completely different person and out of Kid Cloud's (and subsequently the player's) control (it would also explain why it's Kid Cloud that leads Tifa through his Cosmosphere later on in the Lifestream); the other part probably being Aerith/s being the one instigating this separation instead of it just being a random occurrence (and why she doesn't just walk up to Cloud and take the Black Materia out of his hand)) and at the City of the Ancients).
Won't lie the amount of parentheses in there just fucked my mind up a bit. xD
But I do like that theory and it would make a lot more sense. Jenova is super interesting, a shame a lot of her is merely assumed (or left in Ultimania's or that one brief video where Aeris' mum becomes "Misses Exposition"). Can you expand on the last part? I'm not sure I understood.... Aeris really just kinda stood there and I never got why.
Yeah, I kinda went a bit overboard on that one due to going off on a tangent.
The long answer is that the game never really specifies, but it could be inferred that the whole sequence is supposed to be taking place from inside Cloud's head looking out at what's going down. That's why all the characters save for Kid Cloud are moving so slowly. But in addition to that, the scene also could be implying that the whole reason why player is in charge of Kid Cloud and not IRL Cloud is because the player's perspective has changed versus the other times Sephy shows up (of course, the perspective doesn't change when Cloud comes under the influence and nearly cleaves Aeris in half and the player is in direct control of the windup even, but then again, he's actually stopped this time (for all that it mattered)).
Furthermore, during the hidden plot dump at Icicle Inn, Iffana's (Aerith's mother) description of Jenova is probably the closest the game ever comes to spilling the beans on it/her. According to her, Jenova first appeared to the Cetra as friends, neighbors, loved ones lost long ago and that by the time they figured out what was going on, it was already too late for them. One interpretation is that Jenova has the power to change her/its appearance, but the game was probably going for the fact that Jenova can create delusions of what people want to see in order to manipulate them towards it/her's nefarious ends. Sephiroth saw himself as an Ancient during the Nibelheim incident, was drawn to Jenova and freed her/it. He probably saw himself as an Ancient in order to give significance to the fact that he was bio-engineered by a dipshit trying to rub human and alien DNA together like sticks in a firepit.
Another would be Hojo who, throughout most of the game, is an incompetent mad scientist and a putz but little more than self-aggrandizing, but when you finally confront him at the controls of the Mako Cannon he's developed a massive father complex for Sephiroth and is trying to 'help' him by overloading the cannon to 'send him energy' as a result of injecting himself with Jenova cells (if anything this would support the theory that the Cetra's empathic nature was the reason for their downfall due to Jenova being able to attack their psyche directly; humans on the other hand, Jenova has little use for unless they're first infected with Jenova's own cells).
Likewise, Cloud has a huge hero worship complex and thanks to a combination of Zack's interference, Tifa's expectations and his own disdain at his presumed powerlessness compared to Sephiroth and Zack. Thus he was open to Jenova's influence which is why he's freed from Shinra's detention center by Jenova and allowed to chase it/her thinking she/it was Sephiroth (which is why the Disk 1 Sephy you chase all over hell and gone can fly and do other things normal Sephiroth couldn't, as well as turn into parts of Jenova when you fight him/it/her). And of course, why when the party chases after him/her/it, you eventually come across others (the men in black) heading towards a reunion with 'mother', which, despite the party's intentions otherwise, is where they too end up with the Black Materia in hand which Cloud forks over after his breakdown in not-Nibelheim over not being Zack. In fact, the whole not-Nibelheim scene is Jenova's doing in order to force Cloud to face the truth in order to create enough doubt and uncertainty in his actions to prey upon. The other goal of the 'Reunion' is to reunite Jenova's body with it/her head as Sephy only took her/its head during the Nibelheim incident, which he was still holding on to when he got dunked in the Life-drink, unfortunately for Jenova.
That all said, I have no clue as to what's up with Sephiroth during the final boss fight beyond, "The game needs a Final Fantasy Final Boss.". I suppose one could say that he's basically FFVII's version of Zeromus/Necron.
The short (or tl;dr) of my post is that: Snow is far more like vanilla FFVII's Cloud than Lightning ever was/will be, Disk 1 Sephiroth is Jenova's body (sans head) in disguise, who takes advantage of Cloud's "I'm a hero!" phase, as well as getting in a little vengeance on the side for the guy that stalled it/her plan for five years, Aeris tries to counteract Jenova's influence but fails miserably, the rest of the party was caught in cutscene purgatory and Hojo is a massive idiot for enabling all of this to begin with.